Industry Escalates Fight Against State Broadband ‘Rate Regulation’

WASHINGTON, May 29, 2025 – Broadband trade groups intensified their opposition to state-imposed broadband price caps this week.

On Thursday, ACA Connects released a study conducted by consulting firm Cartesian warning that such regulations could slash broadband investment by up to 41 percent.

The release came just days after CTIA, NCTA, and USTelecom filed comments with the Justice Department urging federal preemption of state laws they say mimic utility-style rules once proposed under federal Title II authority.

Both efforts reflect mounting industry concern resulting from states like New York successfully implementing laws to mandate low-cost broadband plans for low-income households.

Several other states have introduced legislation that would cap prices providers can charge to low-income subscribers, including: California, Massachusetts, Vermont, Connecticut, Maryland, and Minnesota.

The analysis commissioned by ACA Connects and conducted by Cartesian Inc. found that broadband price regulations like New York’s Affordable Broadband Act could reduce capital investment by 19 to 41 percent.

The study, presented by Cartesian vice president Michael Dargue on Thursday, concluded that “rate regulation interferes with competitive market dynamics and would result in less investment, less competition, and a reduction in consumer welfare” while “smaller [ISP] providers would face disproportionate economic burdens”.

Capital investment could decline by 19%, study says

Using a model that looked at investment decisions by internet service providers on a census-tract level, the group estimated that under the most lenient regulatory regime, with a general broadband average revenue per user (ARPU) of $70 and a low-income broadband ARPU of $30, capital investment would decline by 19 percent, or about $6.2 billion. 

Under the strictest regime, with a broadband ARPU of $60 and a low-income broadband ARPU of $15, capital investment would decline by 41%, or over $13.5 billion.

“Most states [would] lose between 15 to 35 percent of estimated network investment,” the study explains. “Less investment will result in fewer market entrants, and hence less service provider choice for consumers.”

Notably, the study authors used Federal Communications Commission data, which has been accused of overreporting coverage, to estimate the number of US households served by at least one broadband provider. They also examined the average cost of broadband in urban areas, though confirmed that they did not have pricing data for rural areas. 

It was not immediately clear if the model took into account exemptions that many recently proposed price caps give to smaller ISPs, which allow them to charge higher rates if they can show an economic need.

The ACA Connects study also expressed support for the now defunct Affordable Connectivity Program. It listed the ACP under a section titled “Examples of Alternative Affordability Tools” and listed several direct subsidy programs, such as those for housing, nutrition, and utilities, to demonstrate that “direct subsidies are a common policy tool to assist lower-income households in affording essential goods.”

The presentation of the Cartesian study comes just two days after the The Wireless Association (CTIA), The Internet & Television Association (NCTA), and USTelecom – The Broadband Association filed a comment with the Department of Justice asking them “to consider bringing affirmative preemption litigation against the harmful state laws already on the books or soon enacted—particularly those that directly regulate broadband rates.” 

At least one state, Tennessee, has moved in the opposite direction and enacted a law limiting broadband service regulation by state entities.